Ceat may sell land to trim debt
Tyre maker Ceat may sell some of its unutilised land parcels to reduce its debt in order to offset high interest costs that are weighing on its profitability. In the last two quarters, it repaid Rs 100 crore, reducing it debt to Rs 1,250 crore. Manu P Toms reports.Updated: Feb 09, 2013 01:32 IST
Tyre maker Ceat may sell some of its unutilised land parcels to reduce its debt in order to offset high interest costs that are weighing on its profitability. In the last two quarters, it repaid Rs 100 crore, reducing it debt to Rs 1,250 crore.
"We might consider selling unproductive assets such as a few land parcels," said Manish Dugar, chief financial officer, Ceat. "Whether we do it or not, we should be able to meet whatever debt comes up for repayment through our internal accruals," he said.
Dugar insisted that these are small properties that would only have limited impact in reducing debt. However, it is widely speculated the company may sell its 24-acre Bhandup plot in Mumbai once it shifts its old and heavy-octroi-paying plant to Ambernath in the outskirts of the city.
Ceat had raised Rs 130 crore five years ago by selling 7 acres in Bhandup. Shifting its plant to Ambernath would help the company save Rs 17-18 crore in octroi every year. However, Ceat is yet to finalise its plans to build a plant in Ambernath.
Ceat has, over the years, offered the voluntary retirement scheme (VRS) option to many workers in Bhandup.
Ceat's third quarter profit almost tripled to Rs 22.44 crore year-on-year as increased production in Halol radial tyre plant fetched strong orders from automotive manufacturers and subdued rubber prices brought down raw material cost. The company's consolidated revenue grew 12% to Rs 1,245 crore.